Final answer:
A buyer usually obtains a binder for insurance coverage on a new home prior to closing. The escrow process can facilitate the payment of home insurance and property taxes through the monthly mortgage payments, simplifying the homeowner's bills.
Step-by-step explanation:
The subject of the question is on the topic of when a buyer obtains a binder for insurance coverage on their new home. It's important to understand the role of escrow in the home-buying process. An escrow is an arrangement where money or assets are deposited with a neutral third party, who manages the payment of expenses such as home insurance and property taxes. Typically, a buyer obtains a binder for insurance coverage prior to closing on a new home. This is to ensure that the property is covered in the event of a loss from the moment possession is transferred. The escrow account can then be used to manage the ongoing payment of insurance and taxes as part of the monthly mortgage payment, consolidating bills and simplifying the homeowner's financial responsibilities.